“We have 300 downloads and no sales.”
“People tell me I have a great idea, but none of them are buying my software.”
“My sales/download conversion ratio is 1%. It should be 8%.”
“Folks are signing up for an account but they don’t come back.”

Of course everyone wants “more sales,” but I’m specifically talking about the early stage of your company, when your v1.0 is shaky but has enough features that it should be more viable than it is. When your website copy is good enough that people are willing to sign up or download, but the sales aren’t coming in like they ought.

This problem is solved only one way: You need feedback from lost sales.Empirical data, not your own ideas about why people might not be buying.

You need to talk with the people who were interested enough to find your website, read your marketing copy, download your product, and then give up without even an email. That’s the low-hanging fruit; those are the people who are in your grasp, who should be buying today, but aren’t.

Or as Eric Ries says, “Not listening is the cardinal sin … Any other mistake can be overcome: shipping bad product, removing key features, erroneously banning community members, even kicking out a whole segment of customers.”

But I find that entrepreneurs — especially technical ones — fight me on this tooth and nail. And I’m not surprised because, as usual, I too used to hold the I-already-know-why, I-know-my-customers-better-than-they-do attitude.

So once and for all, I’d like to dispense with the usual arguments for why “more feedback” isn’t the problem:

Existing customers are telling us to do X, so we should do X.Customer requests are important and you must follow their lead, especially in the beginning. But what about the 98% of trial users who didn’t buy? It is they who hold the keys to more sales! Existing customers bought in spite of barriers to sale, so they’re no help in identifying the barriers. Listen to them to increase your product’s value, but listening to them to increase sales is classic survivor bias.

What we need is New Feature X, then people will buy.This is almost never true. The world is filled with successful v1.0 products that lacked obvious features; in fact I challenge you to find an exception. Ben Yoskovitz wrote a great post about this fallacy (with 27 concurring comments). Even Nintendo says “the most important feature is the one no one asks for.”

We need to clean up the software before we can get real feedback.At Smart Bear, the first incarnation of our code review product was so hard to decipher, I can’t understand how we got customers. They used it in spite of the problems, not because of them. If you’re solving a genuine pain, people will try the software, complain about it, ask for features, and generally be engaged; if that’s not happening, you’re not solving the right problem or not making that obvious, and that is critical to getting revenue.

Have you ever worked on a software project for many years and lived through a face-lift? After you’re used to the new look and creature-features, when you see the old version it’s so bad you get embarrassed, right? It’s the natural order of things. Polish isn’t important if you don’t have enough revenue.

I’m a user myself, so I know what’s missing.That’s great, but all that means is that you have 100 ideas for new features, but “more features” is almost certainly not the problem. It means is you have a “vision” which is almost certainly not how your company is going to unfold.

Often the real impediment to sales is as mundane as “New users are presented with a blank screen, so they don’t know what to do next, so they abandon the trial,” or “The installer doesn’t work properly under Vista, so people give up.” The fact that you’re a user yourself is the worst position for you to be in because you can’t be objective about the new user experience, and you can’t put yourself in the shoes of a user possessing below-average intelligence. Which half of them possess.

There, I said it. Most of your users are dumb; almost all are dumber than you are. You are not your typical user.

Apple just knows what’s cool. So do we.This is a common misconception, easy to believe because Apple does keep product development close to the vest. However, it’s completely untrue. See the VentureHacks blog quoting Steve Jobs on the matter; then see their roadmap for collecting customer feedback and using it for repositioning, just like Apple does.

We can’t afford to delay the v#.# release.If you have no real evidence that revenue will suddenly improve with the next release, why do you think it’s important to release it? Just because it has “more stuff?” The only reason to be excited is because it’s different, and since the status quo isn’t working, you’ve got to try something different. But is that “stuff” why people are downloading but then abandoning? Until you can answer that question with empirical data, there’s no reason to believe the new stuff will be more compelling than the last stuff.

Getting revenue is a marketing/sales function; I need to be heads-down in the code.In a startup, it’s everyone’s job to get revenue. Sure, the usual day-to-day activities should be divvied up between founders; not everyone needs to write letters to bloggers and be glued to Twitter live-search. But if you don’t know why people aren’t buying, that’s the #1 bug and the #1 feature you need to be working on. There’s lots of ways (see below) to change the product or website in under a day that will begin fixing the problem. Saying “it’s marketing’s job” really means “I’m not going to help get revenue.” Unacceptable.

Hopefully by now you’re convinced to get more feedback from lost sales, but how do you go about doing it?

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Jason – this is great stuff. As soon as we get our sign up process up and running we’ll be exactly where those other companies are at: critical features in place, many improvements to be made, and needing to SELL!

In your experience, what is the best way (or at least a way) to identify those people that almost bought except ….. happened? Seems like the best kind would be those that come to your site and then walk away… but how do you find those people?

This is excellent advice. I love that Steve Johnson presentation as well.

Reliance on "inside the building" explanations isn’t only an early stage thing. Every technology companies needs to use feedback as the foundation for decision making.

Outside of product, I like to also focus on pricing, people & process. Even then we need to look across those silos. Perhaps a missing feature was a big deal to prospect, but even with it you just got plain out sold, out serviced, etc.

Our daily discussions are centered around two main questions: are our users dumber than or is our product not explained to them well enough? Are these features that our users want what we want from our product?

I agree, you have to listen and learn from your users (both happy and unhappy ones) if you want to build a good product.

Hi Jason, great post again. I am new to the world of software – having come from a long and varied career in marketing – starting in market research. So I am totally with you on the “listen to your customers” theme.

Being new to the software industry, I am still in something of a state of shock about how difficult many software companies make it for their free downloaders to talk to them. Surely you would want to do everything you possibly can to make sure you are hearing whatever these people have to say??

You’re so right about the free downloads. There’s this sense that it’s a “right” to be able to download free trials “without any barriers.”

While it’s true that in general you want to minimize barriers and try not to bother people, there are lots of things you can do which aren’t “sleazy sales” or “annoying,” but which get the conversation going.

Stay tuned next week for some of those ideas, and please comment next week with your own ideas!

Great post! Thanks for reconfirming something I’ve come to realize lately after banging my head against the wall many times over. I feel there’s simply lots of things that can spook customers, which makes it quite hard to keep up and guess what you’re missing, if anything. Hence, it’s totally true there’s always one more feature you could add to make your product better. If only you add that one feature! No doubt you need to keep the updates coming at the very least once or twice a year. But if the given product does well what it promised it would do, and you’re still not making enough sales, it’s not the product. It’s something else.

I myself realized (1) I needed a new website. One that’s more inviting and simpler than the current one. (2) I needed to clean the help contents available within the application. You do not need to try to explain explain everything related to what the application is all about. Simpler is always better. (3) Nowadays, customers (me included) like free stuff. As simple as it sounds, it still hit me like a brick. Your first version needs to be and stay free. Ouch! Yep, make money from an extended version or another one altogether, but the initial killer one needs to be free, and the rest will follow (or so I hope)! ;)))

For example, with iPhone apps you have to have a free “lite” version because there’s no other way to trial the software. But with desktop software or web-based software it’s easy to do a 30-day trial, so it’s “free” but not in the “free and stay free forever” sense.

The “Freemium” model you’re talking about is under intense debate in the bloggosphere right now. It seems clear that there are times it’s appropriate and times it’s not, but not clear how to know. :-)